Despite better-than-expected wage growth out of the U.K., the pound is slipping against the dollar, which is benefitting from rising Treasury yields and trade concerns.
Sterling slips as wages rise
The U.K. reported better-than-expected wage growth Tuesday morning, and unemployment remained at a four-decade low. However, sterling wasn’t able to hold onto its strength from Monday, falling against a stronger dollar.
GBP/USD rose to 1.304 Monday off of comments by E.U. chief Brexit negotiator Michel Barnier, who said a deal could be reached in six to eight weeks.
The pair climbed even higher to 1.308 Tuesday morning before falling below 1.300.
Average earnings excluding bonuses in the U.K. for the three months ending in July grew 2.9% compared to 2.8% expected. The figure including bonuses rose 2.6% compared to estimates of 2.4%.
Unemployment remains at a record 4%.
Dollar boosted by risk aversion
The increase in concern regarding the U.S.-China trade relationship is helping the dollar Tuesday morning.
The Trump administration is ready to impose more tariffs on China and China is filing complaints against the U.S. to the World Trade Organization.
EUR/USD dropped to 1.158 on USD strength. Earlier Tuesday, the pair rose to 1.164 on better-than-expected ZEW economic survey out of Germany.
The ZEW index of investor sentiment for the current economic situation came out at 76.0 compared to 72.0 expected.
AUD falls on business confidence
The Australia dollar dipped lower overnight as business confidence fell to a two-year low.
The National Australia Bank’s business confidence measurement fell to 4, below expectations of 5.
AUD/USD hit below 0.71 Monday and is even lower around 0.708 Tuesday.